Persistent, Tech Mahindra, and Other IT Stocks Fall Up to 4% Amid Rising US-China Trade Tensions

On June 2, shares of several major Indian IT companies experienced sharp declines amid escalating trade tensions between the United States and China. The persistent sell-off pushed the Nifty IT index down over 1%, hovering around 36,948 in the morning session, extending losses for the second straight day.

Market Impact and Sector Performance

The broad decline in IT stocks came as investor concerns resurfaced over the deteriorating US-China trade relationship, which is critical for the IT sector since a significant portion of revenue is linked to the US economy. The recent tariff conflict has reignited fears of a possible slowdown in US growth and higher inflation, both negative catalysts for IT service demand.

• Nifty IT index fell over 1% to 36,948

• IT sector losses extended for the second consecutive session

• Shares of key IT companies broadly down, with some dropping as much as 4%

Company-specific Losses and Revenue Impact

Mphasis emerged as the biggest loser among IT stocks, plunging nearly 4% to Rs 2,466 per share. The stock slide followed news that Mphasis lost one of its oldest clients—FedEx Corp.—which accounted for about 8% of the company’s revenue. FedEx has selected Accenture Plc to handle much of its IT services, a blow to Mphasis.

Persistent Systems shares also fell sharply by over 2%, trading at Rs 5,515. Tech Mahindra and Wipro shares dropped over 1%, while HCL Technologies, Tata Consultancy Services (TCS), Infosys, LTI Mindtree, and Coforge traded with marginal losses.

Highlights:

• Mphasis shares fell nearly 4%, losing a key client (FedEx) worth 8% of revenue

• Persistent Systems down over 2%

• Tech Mahindra and Wipro shares declined over 1%

• Other IT firms such as HCL Tech, TCS, Infosys, LTI Mindtree, Coforge posted smaller losses

Escalation in US-China Trade Dispute

The sell-off was triggered after US President Donald Trump publicly accused China of “totally violating” the recent trade agreement between the two countries. Trump stated that after imposing high tariffs that severely impacted China’s economy, a “fast deal” was made to stabilize relations. However, he asserted that China has since reneged on the agreement.

China’s Ministry of Commerce responded sharply on June 2, dismissing the US allegations as “groundless” and warned of “resolute and forceful measures” to protect its interests if the US persists in damaging Chinese economic interests.

This fresh flare-up in the tariff conflict has unsettled markets just as tensions had begun to ease after months of tit-for-tat tariffs that had raised fears of a global economic recession.

Highlights:

• Trump accused China of violating the US-China trade agreement

• China rebutted US claims, threatening strong countermeasures

• Recent tariff war tensions had slightly eased before this renewed escalation

• Rising trade friction weighing on global markets and IT sector sentiment

Sector Sensitivity to US-China Trade Dynamics

The Indian IT sector remains highly sensitive to US-China trade relations due to its dependence on the US market. Earlier rounds of tariff increases had sparked fears of a US economic slowdown, prompting IT stock sell-offs. The sector rebounded when trade tensions cooled but now faces renewed pressure from the latest geopolitical developments.

Highlights:

• IT companies derive major revenues from US clients

• Tariff wars and inflation fears lead to demand uncertainty

• Renewed trade tensions have caused a reversal of recent gains in IT stocks